"Failing to plan is planning to fail." This quote from Alan Lakein is one that should be familiar to most people in the business world.  This is why all companies have meetings; goals are defined and a plan of action for achieving these goals is formed.  The plan of action will most likely contain information regarding the responsibilities of each individual, sub-goals with individual deadlines, and many other items that need to be monitored.

This is just one of the many reasons a company needs a good system for documenting business processes.  The plan formed at this type of meeting gets documented and copies are distributed to everyone that attended.  Such a document helps keep everyone on the same page (no pun intended).

Why else would a company need to document its business processes?  For publicly traded companies, it is required by law.  The accounting scandals that brought down several large corporations, such as Enron and Worldcom, were instrumental in defining the need for the Sarbanes-Oxley Act of 2002.  This Act requires publicly traded companies to document their internal control procedures along with their financial statements.  This is of great importance to shareholders, creditors, and anyone else with a financial connection to the company, as there is now more transparency regarding internal operations. (For the curious, the sections that relate to the issue of internal control are section 302 and section 404.)

However, isn't this information beneficial to the company itself, even if the company is privately owned?  Consider the many benefits your company can realize by documenting your processes:

• Define risks and put controls into place to mitigate those risks.
• Define responsibilities so all employees know what is expected of them.
• Document specifications so an employee does not leave with valuable information solely in their head.
• Lay out tasks in a step-by-step procedure so getting a new employee up to speed is a repeatable process.  More experienced employees can spend less time training newer ones and more time being productive.
• Review and update procedures on a regular basis.  If goals are not being met, you can examine which part of the procedure is breaking down and determine how to correct it.  If things are going well, determine if there are areas that can be improved to allow you to exceed your goals.
• Get your business ready to sell.  Companies with documented business processes historically are much more valuable when they are sold.
• Comply with initiatives like ISO9000, ISO14000, COBIT and SOX.

Where to Begin
Wikipedia defines the phrase "business process" as a "collection of related, structured activities or tasks that produce a specific service or product (serve a particular goal) for a particular customer or customers," and goes on to say that "It often can be visualized with a flowchart of a sequence of activities."

The three types of business processes include:

• Management processes, the processes that govern the operation of a system.  Typical management processes include "Corporate Governance" and "Strategic Management".
• Operational processes, processes that constitute the core business and create the primary value stream.  Typical operational processes are Purchasing, Manufacturing, Marketing and Sales.
• Supporting processes, which support the core processes.  Examples include Accounting, Recruitment and Technical Support.

By far the most important step in creating business processes is Management's step to Define the goal.  Otherwise you could end up in a situation Robert Ringer describes so eloquently in his book Million Dollar Habits: "Many a person has climbed a ladder only to find it was leaning against the wrong wall."

Once you have established the goal, you can start defining the steps necessary to reach it.  This is where the flowchart comes in.  Quite often, one task will need to be accomplished before another can be started, and sometimes when an item fails an inspection it is necessary to go back a few steps and begin again.  Once the basic flowchart is mapped out, the task of delegating responsibility can begin.  At this point, everyone should not only know what his or her role is, but also (and more importantly) how performing his or her roll contributes towards the company’s success.  It is no secret that people perform their jobs much better when they feel their work has a sense of purpose.

Measuring Progress
Periodically, you will want to review the results of your business process to see if you are attaining your goals.  This involves defining Key Performance Indicators (KPI) so that you can have a tangible measure of how well a process is working. For example, salespeople often use a formula to determine how many leads they need to get in order to meet their sales quotas.  Often the formula looks similar to this:

As you can see, this is actually contingent on a few KPIs.  If a salesperson falls short of the quota, they can refer back to this formula and see what items are responsible for the shortcoming.  For example, a salesperson might get more than enough leads but have a lower than expected rate of converting these leads into opportunities.  The information provided by a periodic review will point towards the area(s) that needs corrective action.

How to Organize Your Documents
Organizing the documents created by defining business process can itself be a complicated process.  Many companies have hard drives filled with files created in Microsoft Word, Excel and Visio.  Quite often this information is not well organized which leads to wasted time and effort in retrieving the documents.  
Ironically, this is what all of the effort was supposed to eliminate in the first place!

Fortunately, there are better alternatives.  If you would like to learn more about documenting your business processes, check out our website at www.kastechco.com or contact us at 215-702-8155.